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                                                                    Exhibit 99.1

CAUTIONARY STATEMENT

WE, OR PERSONS ACTING ON OUR BEHALF, OR OUTSIDE REVIEWERS WE HAVE RETAINED
WHO ARE MAKING STATEMENTS ON OUR BEHALF, OR UNDERWRITERS OF OUR SECURITIES,
MAY FROM TIME TO TIME MAKE WRITTEN OR ORAL STATEMENTS THAT QUALIFY AS
"FORWARD-LOOKING STATEMENTS" AS THAT TERM IS DEFINED UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995 (THE "ACT"). THIS CAUTIONARY
STATEMENT, WHEN USED IN CONJUNCTION WITH AN IDENTIFIED FORWARD-LOOKING
STATEMENT, IS FOR THE PURPOSE OF QUALIFYING FOR THE "SAFE HARBOR" PROVISIONS
OF THE ACT. AS SUCH, IT IS INTENDED TO BE A READILY AVAILABLE WRITTEN
DOCUMENT THAT CONTAINS FACTORS THAT COULD CAUSE RESULTS TO DIFFER MATERIALLY
FROM THE FORWARD-LOOKING STATEMENTS. THESE FACTORS ARE IN ADDITION TO ANY
OTHER CAUTIONARY STATEMENTS, WRITTEN OR ORAL, WHICH MAY BE MADE OR REFERRED
TO IN CONNECTION WITH ANY FORWARD-LOOKING STATEMENT.

THE FOLLOWING MATTERS, AMONG OTHERS, MAY HAVE A MATERIAL ADVERSE EFFECT ON
OUR BUSINESS, FINANCIAL CONDITION, LIQUIDITY, RESULTS OF OPERATIONS OR
PROSPECTS, FINANCIAL OR OTHERWISE. REFERENCE TO THIS CAUTIONARY STATEMENT IN
THE CONTEXT OF A FORWARD-LOOKING STATEMENT OR STATEMENTS SHALL BE DEEMED TO
BE A STATEMENT THAT ANY ONE OR MORE OF THE FOLLOWING FACTORS MAY CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENT OR
STATEMENTS.

RISKS RELATED TO OUR LIQUIDITY AND ACCESS TO CAPITAL RESOURCES

         WE MAY NEED ADDITIONAL CAPITAL TO FUND CONTINUED NEGATIVE CASH
FLOWS, BUT MAY NOT BE ABLE TO RAISE CAPITAL ON ACCEPTABLE TERMS OR AT ALL. To
date, we have operated on a negative operating cash flow basis, and we expect
to continue to do so in the near future. Our business requires substantial
cash to make payments in connection with the purchase and securitization of
loans, for operating expenses and to service our debt. We may require
additional capital in the future to satisfy our operating and debt service
requirements, to fund growth or to repay our outstanding indebtedness at
maturity. We may not, however, be able to access the capital markets in the
future on terms acceptable to us, if at all. Factors which could affect our
ability to access the capital markets or the costs of any capital raised
include:

         -         changes in interest rates;

         -         general economic conditions;

         -         the perception of us in the capital markets; and

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         -         the performance of our securitization trusts.

In addition, the agreements governing our existing debt securities and credit
facilities significantly restrict our ability to incur additional
indebtedness and to issue new classes of preferred stock. Any agreements
governing future debt securities or credit facilities may contain similar
restrictions.

         ADVERSE CHANGES IN OUR ASSET-BACKED SECURITIES PROGRAM OR IN THE
ASSET-BACKED SECURITIES MARKET FOR AUTOMOBILE RECEIVABLES IN GENERAL COULD
MATERIALLY ADVERSELY AFFECT US. Our business depends on our ability to
aggregate and sell automobile loans in the form of publicly offered
asset-backed securities. These sales generate cash proceeds that allow us to
repay amounts outstanding under our "warehouse" credit facilities and to
purchase additional loans. In addition, the sale of loans to a securitization
trust in preparation for "securitization," which generally occurs once per
quarter, gives rise to the gain on sale that forms a significant part of our
reported earnings for each quarter. Accordingly, adverse changes in our
asset-backed securities program --such as a delay in the consummation of a
planned securitization beyond quarter end, negative market perception of us
or the failure of the loans we intend to sell to conform to insurance company
and rating agency requirements --or in the general market for automobile
loan asset-backed securities could materially adversely affect our ability
to purchase and resell loans on a timely basis and on terms reasonably
satisfactory to us.

         IF IN THE FUTURE WE ARE UNABLE TO OBTAIN FINANCIAL GUARANTY
INSURANCE POLICIES, OR DETERMINE THAT THEY ARE TOO EXPENSIVE, IT COULD REDUCE
OUR ABILITY TO SELL THE ASSET-BACKED SECURITIES WE SPONSOR AND ALSO REDUCE
THE PRICE AT WHICH WE ARE ABLE TO SELL THEM. All of the securitizations we
have sponsored since March 1993 and one of our current "warehouse" credit
facilities have utilized credit enhancement in the form of financial guaranty
insurance policies issued by Financial Security Assurance, Inc., which is
known as "FSA." These financial guaranty insurance policies have resulted in
those asset-backed securities being rated "AAA/Aaa." We believe that this
rating has made those securities easier to sell than securities with a lower
rating and has enhanced the price at which they have been sold. We also
believe that the use of this form of credit enhancement was cheaper than
alternative forms available to us at the time. However, FSA is not required
to insure the securitizations we sponsor and may not continue to do so. In
June 1999, FSA advised us that it expects to modify its requirements for any
future securitization transaction with respect to which it provides financial
guaranty insurance. These modifications could significantly increase the cash
cost to us of using FSA as the provider of credit enhancement for future
securitizations. We are currently examining our options in this regard, which
may include issuing uninsured asset-backed securities with other credit
enhancement features. If we were to do this, some of those securities are
likely to receive a rating that is somewhat lower than "AAA/Aaa," which could
reduce our ability to sell those securities at prices comparable to those
received in the past.

         EARLY TERMINATION OF OUR "WAREHOUSE" CREDIT FACILITIES, OR OUR
INABILITY TO ARRANGE ADDITIONAL WAREHOUSE FACILITIES OR TO EXTEND OR REPLACE
EXISTING FACILITIES WHEN THEY EXPIRE, WOULD

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HAVE A MATERIAL ADVERSE EFFECT ON US. We depend on warehouse facilities with
financial institutions or institutional lenders to finance our purchase of
loans on a short-term basis pending securitization. At June 30, 1999, we had
three primary warehouse facilities with an aggregate borrowing capacity of
approximately $700 million. One of these facilities, with a capacity of $400
million, was renewed on July 13, 1999, and will expire in July of 2000. The
FSA financial guaranty insurance policy with respect to this facility will be
reduced from $400 million to $200 million on February 15, 2000; at the same
time, the capacity of the facility itself will also be reduced to $200
million. The remaining facilities expire in September and October of 1999,
subject to earlier termination on the occurrence of certain events and to
renewal or extension at the option of the lenders. These or similar
facilities may not continue to be available on terms reasonably satisfactory
to us. Early termination of these warehouse facilities, or our inability to
arrange additional warehouse facilities or to extend or replace existing
facilities when they expire, would significantly reduce or end our ability to
purchase and securitize automobile loans.

         MOST OF OUR CASH FLOW COMES FROM, AND ASSETS BELONG TO, LEGALLY
DISTINCT SUBSIDIARIES WITH NO OBLIGATIONS TO PAY AMOUNTS DUE FROM US AND
WHOSE CREDITORS HAVE CLAIMS ON THOSE ASSETS THAT ARE SENIOR TO OUR CLAIMS OR
THE CLAIMS OF OUR CREDITORS. A significant portion of our cash flow comes in
the form of distributions from our special-purpose subsidiaries, which have
the legal right to receive the excess cash flow from the securitization
trusts we have sponsored. These subsidiaries are separate and distinct legal
entities with no obligation to pay any amounts due under our debt instruments
or to make any funds available to us, whether by paying dividends or
otherwise, so that we can do so. As a result, if any third party were to
enforce any of the restrictions on the distribution of cash from our
subsidiaries discussed below, our ability to pay interest and principal on
our outstanding debt would be significantly impaired. In addition,
substantially all of the assets shown on our financial statements, in
particular the "finance income receivable" and the loans held for sale, are
legally owned by these special-purpose subsidiaries, not us. Thus, creditors
of those subsidiaries would have first claim to those assets in any
liquidation or similar event, rather than us or any of our creditors. As of
June 30, 1999, our subsidiaries had approximately $98.3 million of
indebtedness.

         WE HAVE A LARGE AMOUNT OF OUTSTANDING DEBT, WHICH MAY MAKE IT HARDER
TO OBTAIN FINANCING, WILL INCREASE THE COST TO US OF OUR DEBT AND MAY MAGNIFY
THE RESULTS OF ANY DEFAULT UNDER ANY OF OUR OUTSTANDING INDEBTEDNESS. At June
30, 1999, we had a total of $447.6 million of debt outstanding and had a
debt-to-equity ratio of 1.69. (These amounts do not include any debt of our
subsidiaries.) The issuance of additional debt securities could increase our
debt-to-equity ratio or "leverage," which may in turn make it harder for us
to obtain future financing. In addition, the issuance of any debt securities
will increase the cost of paying interest on our debt, except to the extent
that the proceeds from the sales are used to repay other outstanding
indebtedness. Although our cash flow from operations and capital raising
activities has historically been sufficient to pay amounts due on our
indebtedness, this may not continue to be the case; any additional
indebtedness may increase the risk that our cash flow is insufficient to

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pay amounts due. Finally, our level of indebtedness, and in particular any
significant increase in it, may make us more vulnerable if there is a
downturn in our business.

         OUR OUTSTANDING DEBT SECURITIES CONTAIN RESTRICTIVE COVENANTS THAT
MAY RESTRICT OUR ABILITY TO OBTAIN FINANCING AND NONCOMPLIANCE WITH WHICH
COULD LEAD TO A DEFAULT WITH RESPECT TO THAT AND ANY OTHER INDEBTEDNESS. We
are subject to restrictive covenants under our outstanding debt securities
and our other debt financing agreements, some of which may significantly
restrict our ability to incur additional indebtedness or to issue preferred
stock. Any future indebtedness may also contain similar restrictive
covenants. Noncompliance with any covenants under any of our outstanding
indebtedness, unless cured, modified or waived, could lead to a default not
only with respect to that indebtedness, but also under other indebtedness. If
this were to happen, we might not be able to repay or refinance all of our
debt.

         IF THE HOLDERS OF OUR CURRENTLY OUTSTANDING SENIOR NOTES ISSUED IN
MARCH AND OCTOBER 1997 WERE TO EXERCISE THEIR RIGHT TO REQUIRE US TO
REPURCHASE THEIR NOTES, IT MIGHT CAUSE A DEFAULT UNDER OUR OUTSTANDING
INDEBTEDNESS. The holders of our currently outstanding senior notes issued in
March and October 1997 may require us to repurchase all or a portion of those
notes upon the occurrence of various events, including a change of control,
specified types of asset sales and specified adverse loss experiences with
respect to the securitization trusts we have sponsored. In 1996, we received
an indication of interest to buy our company. At that time, we examined our
strategic alternatives, including a sale. While no definitive offers to buy
were received, a transaction like this might cause a change in control in the
future. If we were required to repurchase any of these senior notes for this
or any other reason, any funds so used would not be available to pay
principal or interest on any other indebtedness that did not have a similar
covenant, and we might not be able to access other funds to do so. Moreover,
we might not have sufficient funds available to repurchase the senior notes.
Our inability to do so could cause defaults under, and acceleration of, both
the senior notes and, under cross-default provisions, our other indebtedness.

RISKS RELATED TO THE PERFORMANCE OF LOANS IN SECURITIZATION TRUSTS THAT WE
HAVE SPONSORED

         ANY MATERIAL DEFICIENCIES BETWEEN FUTURE LOAN PERFORMANCE AND OUR
CURRENT ESTIMATES OF THAT PERFORMANCE COULD HAVE A MATERIAL ADVERSE EFFECT ON
US, INCLUDING LEADING TO A REDUCTION IN THE VALUATION OF OUR MAIN ASSET,
FINANCE INCOME RECEIVABLE. When we sell loans in connection with the creation
of a securitization trust and the issuance of asset-backed securities by that
trust, we recognize a "gain on sale" and establish an asset that is called
"finance income receivable." Finance income receivable is our principal
asset, which represents our retained interest in the loans sold. Finance
income receivable is calculated using assumptions and estimates concerning
future delinquency, default, prepayment, repossession and net loss rates on
the securitized loans that management believes are reasonable at the time. We
base these assumptions on our historical experience, externally generated
industry information, market conditions and expectations of future
performance and present value discount rates that we believe would be

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requested by an unrelated purchaser of a similar asset. However, the loans
that we securitize may not perform under varying economic conditions in the
manner we currently estimate. In particular, the actual rates of defaults,
prepayments and net losses may exceed the estimates used in valuing the
finance income receivable and would adversely affect anticipated future cash
flow. We periodically review our default, prepayment and net loss assumptions
in relation to the current performance of the loans and market conditions
and, if necessary, adjust the balance of finance income receivable. We have
made two significant permanent reductions to the value of finance income
receivable, one at June 30, 1998 ($114.5 million) and one at March 31, 1997
($98.0 million). Any future permanent reductions to finance income receivable
could adversely affect the price for our securities and our ability to raise
capital as needed. In addition, we may not be able to sell our finance income
receivable at its stated value on our balance sheet.

         ANY DECREASE IN OR INTERRUPTION OF EXCESS CASH FLOW FROM
SECURITIZATION TRUSTS THAT WE HAVE SPONSORED COULD MATERIALLY ADVERSELY
AFFECT US. Our future liquidity and financial condition, and our ability to
finance the growth of our business and to repay or refinance our outstanding
indebtedness, will depend to a material extent on distributions of excess
cash flow from securitization trusts that we have sponsored. The agreements
related to the financial guaranty insurance policies on asset-backed
securities issued by these securitization trusts require us to maintain
specified amounts of cash in "spread accounts" for each insured
securitization trust. Our obligation to establish and fund these spread
accounts are initially met by means of letters of credit, cash deposits
and/or cash flows from the related trust. Each month after the spread account
has been established, any cash received by the related securitization trust
that is in excess of the amount needed to make payments on the asset-back
securities is first used to bring the spread account for that trust up to
required levels. In addition, under our agreements with FSA, each of these
spread accounts is "cross-collateralized" with the other insured
securitization trusts. As a result, cash received by one securitization trust
that is in excess of the amount needed to make payments specifically related
to that trust may be used to support negative cash flow from, or to replenish
the spread account related to, another securitization trust. Only after these
uses is remaining cash distributed as "excess cash flow" to Arcadia
Receivables Finance Corporation, one of our subsidiaries known as "ARFC," and
then on to us. Thus, if the cash flow from all insured securitization trusts
is not sufficient to replenish all spread accounts, excess cash flow may not
be available to us for that month. The timing and amount of excess cash flow
varies based on a number of factors, including but not limited to:

         -        rates of loan delinquencies, defaults and net losses;

         -        how quickly repossessed vehicles can be resold and the price
                  at which this is accomplished;

         -        ages of the loans in the portfolio;

         -        levels of voluntary prepayments; and


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         -        required spread account levels and the amount of cash in the
                  spread accounts relative to those required levels.

Any negative change in these factors could reduce or eliminate excess cash
flows to us. We have in the past experienced interruptions in excess cash
flows and this may occur again in the future.

         LOAN PORTFOLIO DELINQUENCY, DEFAULT AND NET LOSS RATES THAT ARE
POORER THAN SET "PORTFOLIO PERFORMANCE TESTS" COULD RESULT IN A DECREASE IN
OR INTERRUPTION OF EXCESS CASH FLOW AVAILABLE TO US. Each insured
securitization trust has certain "portfolio performance tests" that relate to
levels of delinquencies, defaults and net losses on the loans in the trust.
These portfolio performance tests require that the loan portfolio of each
insured securitization trust have:

         -        an average delinquency ratio not equal to or in excess of a
                  specified percentage;

         -        a cumulative default rate not equal to or in excess of
                  specified percentages, which vary based on the aging of the
                  loan portfolio; and

         -        a cumulative net loss rate not equal to or in excess of
                  specified percentages, which vary based on the aging of the
                  loan portfolio.

If the loans in any trust perform worse than is required by any of these
tests, the amount of cash that has to be retained in the related spread
account or accounts increases significantly until the loan portfolio has
performed at the required levels for a specified period, generally three to
five months. Any violation will decrease available excess cash flow for that
time period. FSA as provider of financial guaranty insurance can waive a
violation of these portfolio performance tests. We have an arrangement with
FSA under which, if loan portfolio performance is poorer than the portfolio
performance test levels, our subsidiary ARFC may make a pledge of cash that
has the effect of preventing the violation of the portfolio performance test.
Some trusts have exceeded these portfolio performance tests in the past, and
some trusts were still in excess of these tests at June 30, 1999, but this
arrangement has prevented a violation. It has also, however, reduced the
amount of cash that would have been available to us for use if we had
received a waiver of the violation. An increase in loan delinquencies,
cumulative defaults or net losses could result in one or more additional
existing securitization trusts exceeding one or more of the portfolio
performance tests unless the portfolio performance test levels are changed.
FSA is not required either to continue its arrangement with us or to waive
any future violations of portfolio performance test levels and might not do
so if additional trusts were to perform more poorly than required.

         THE OCCURRENCE OF AN "INSURANCE AGREEMENT EVENT OF DEFAULT" COULD
HAVE A MATERIAL ADVERSE EFFECT ON US. Our agreement with FSA specifies that
there will be an "insurance agreement event of default" if certain events
occur with respect to any series of insured asset-backed securities. These
events include loan portfolio performance tests similar to those

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described above but at significantly higher levels. Following an insurance
agreement event of default, FSA may:

         -        suspend distributions of cash flow from the related
                  securitization trust and all other insured trusts (including
                  one of our "warehouse" credit facilities) until the amount of
                  cash in the affected spread account reaches a preset level
                  (generally 25% of the balance of outstanding asset-backed
                  securities in that series);

         -        capture excess cash flow from performing trusts;

         -        increase its premiums;

         -        replace us as servicer with respect to all insured trusts; and

         -        foreclose on its collateral security interest in the stock of
                  our subsidiary ARFC.

FSA may waive an insurance agreement event of default. Some of the insured
trusts have exceeded these thresholds in the past, but to date we have
obtained waivers to permit distributions of excess cash flow. A further
increase in loan delinquencies, cumulative defaults and net losses might
result in one or more additional securitization trusts exceeding one or more
of these thresholds unless the required performance levels are changed. If
this were to occur, further waivers may not be available to us. Any action
that FSA might take in the absence of a waiver could have a material adverse
effect on us, including our ability to pay our obligations. If FSA terminated
us as servicer, we would no longer receive the related servicing fees. If FSA
foreclosed on the stock that we own in ARFC, it would prevent that subsidiary
from providing cash to us.

         CURRENT AND HISTORICAL DELINQUENCY AND DEFAULT RATES OF LOANS IN OUR
SERVICING PORTFOLIO MAY UNDERSTATE FUTURE DELINQUENCY AND DEFAULT RATES. The
future performance of our servicing portfolio may vary from current and
historical rates for a number of reasons. The incidence of delinquencies and
defaults on automobile loans tends to vary with the age of the loans. For
example, loans that are between six and 14 months old generally have a higher
likelihood of being delinquent or defaulting than loans with similar credit
characteristics that are less than six months or greater than 14 months old.
Accordingly, to the extent that in the future our servicing portfolio grows
so that it contains disproportionately more loans originated within the prior
six months, the current and historical delinquency and default rates of loans
in the servicing portfolio may understate delinquency and default rates after
that time. In addition, to the extent we offer new loan products which
involve different underwriting policies from those we have used in the past,
the delinquency and default rates of our servicing portfolio may change.

         PAST PURCHASES OF HIGHER RISK LOANS MAY CONTINUE TO NEGATIVELY
IMPACT THE PERFORMANCE OF OUR SERVICED LOAN PORTFOLIO. Through 1997, we
consistently increased our purchases of higher risk loans. These historic
increases in the proportion of higher risk loans in our serviced loan

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portfolio led to an increase in the rates of delinquencies, repossessions and
losses on those loans. These higher risk loans will likely continue to
negatively impact our loan performance statistics in the near future.

         INCREASES IN LOAN DELINQUENCY, DEFAULT AND LOSS RATES MAY VIOLATE
TESTS IN THE AGREEMENTS THAT GOVERN OUR "WAREHOUSE" CREDIT FACILITIES. The
agreements that govern our "warehouse" credit facilities contain tests that
set limits on:

         -        loan delinquency rates;

         -        loan default rates;

         -        loan payment extensions;

         -        loan loss rates;

         -        interest rate yields;

         -        borrower bankruptcy rates;

         -        borrower credit scores; and

         -        loan-to-value ratios.

If the performance of the relevant loan portfolios exceeds these limits,
lenders under the affected "warehouse" facility have no further obligation to
extend credit, which would substantially reduce or eliminate our capacity to
purchase additional automobile loans. In addition, if the limits under any
one agreement are exceeded, there may be cross-defaults under other credit
agreements, which could require us to immediately pay all amounts due under
those agreements.

           THERE MAY BE A FUTURE INCREASE IN THE NUMBER OF LOANS THAT WE HAVE
EXTENDED OR AMENDED, WHICH GENERALLY PRESENT SUBSTANTIALLY HIGHER DEFAULT
RISKS THAN LOANS THAT HAVE NEITHER OF THESE CHARACTERISTICS. Like others in
the industry, we give certain borrowers extensions or amendments to loan
terms in certain circumstances. Loans that have been extended or amended
generally present substantially higher default risks than loans that have
neither of these characteristics. Continued slowing of the rate of portfolio
growth, which will result in a higher percentage of loans of the age that are
more likely to be extended or amended, could contribute to an increase in
such statistics. The granting of an extension or amendment may have the
effect of removing the related loan from delinquent status.

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RISKS RELATED TO GENERAL ECONOMIC CONDITIONS

         ECONOMIC CONDITIONS INFLUENCE OUR LEVEL OF BUSINESS AND THE
PERFORMANCE OF THE LOANS IN THE SERVICED PORTFOLIO. Periods of economic
slowdown or recession, whether general, regional or industry-related, may
increase the risk of default on automobile loans. Any increase in defaults
would have the adverse effects noted above. These periods may also be
accompanied by decreased consumer demand for automobiles which would result
in reduced demand for automobile loans and could reduce business for us.
Decreased consumer demand for automobiles also contributes to a decline in
the values of automobiles securing outstanding loans, thereby weakening
collateral coverage and increasing the possibility of losses in the event of
default.

         OUR BUSINESS MAY BE AFFECTED BY PRICES FOR USED AUTOMOBILES.
Significant increases in the inventory of used automobiles during recessions
may depress the prices at which we can sell our inventory of repossessed
vehicles or delay sales. In addition, average used car prices have fluctuated
in the past, and any future softening of the used car market could cause our
recovery rate on repossessed vehicles to decline below the current level.
This, in turn, might have an adverse effect on loan loss levels, with all the
potential effects of a decline in portfolio performance, and could require
adjustments to estimated recovery rates and finance income receivable similar
to those made at June 30, 1998 and March 31, 1997, both of which included
amounts related to a reduction in the estimated recovery rates.

         OUR PROFITABILITY MAY BE DIRECTLY AFFECTED BY THE LEVEL OF AND
FLUCTUATIONS IN INTEREST RATES. The level of and fluctuations in interest
rates affect the difference between the annual percentage rate paid by the
borrowers under the loans we purchase and the interest rate on the asset-back
securities we sell. This "gross interest rate spread" is a major source of
profit for us. We monitor the interest rate environment and employ strategies
designed to mitigate the effect of changes in interest rates on our gross
interest rate spread. However, changes in interest rates may adversely affect
our profitability.

         A CONTINUATION OR INCREASE IN RECENT LEVELS OF PERSONAL BANKRUPTCY
FILINGS COULD ADVERSELY AFFECT THE PERFORMANCE OF THE LOAN PORTFOLIO WE
SERVICE. Recent media reports have suggested an increase in the number of
personal bankruptcy filings and defaults on consumer credit. During most of
1997, much of 1998 and the first five months of 1999, we experienced a slight
increase in the proportion of our servicing portfolio representing loans to
borrowers who have filed for bankruptcy protection. A continuation or
increase in this trend could contribute to greater default and net loss rates
than we have historically experienced. In addition, this increase in consumer
bankruptcy filings and defaults on consumer credit during a period of
economic growth indicates that the impact of consumer behavior on default
rates is not limited to periods of economic slowdown or recession.

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OTHER RISKS RELATING TO US

         WE MAY BE UNABLE TO IMPROVE OUR SERVICING PERFORMANCE, IN PARTICULAR
AS THE RESULT OF HIGH EMPLOYEE TURNOVER OR AN INABILITY TO ATTRACT AND RETAIN
REPLACEMENT SERVICING AND COLLECTION PERSONNEL. Our ability to manage
portfolio delinquency, default and loss rates depends on the maintenance of
efficient collection and repossession procedures and on attracting and
retaining an adequate number of qualified servicing and collection personnel.
We may not succeed in the efforts we have undertaken since 1996 to improve
our servicing and collection performance. During 1997 and 1998 we experienced
an increase in employee turnover rate, especially among our collection
personnel. This increase was due in part to low unemployment rates driven by
economic growth and the continued expansion of the consumer credit markets
and in part to our efforts to consolidate our servicing and collection
operations. This consolidation resulted in service centers being moved from
one location to another. Similar high turnover in the future, or an inability
to attract and retain replacement personnel, could have an adverse effect on
our performance, especially our portfolio delinquency, default and net loss
rates.

         WE ARE A DEFENDANT IN LEGAL PROCEEDINGS THE OUTCOME OF WHICH COULD
HAVE AN ADVERSE EFFECT ON US. We and some of our directors and officers are
defendants in a consolidated lawsuit, IN RE OLYMPIC FINANCIAL LTD. SECURITIES
LITIGATION. The plaintiffs allege that during the period from July 20, 1995
through March 3, 1997, we and our directors and officers illegally engaged in
a scheme that had the effect of artificially inflating, maintaining and
otherwise manipulating the value of our common stock. While we believe that
this action is without merit and intend to defend it vigorously, we cannot be
sure of success. In addition, in the course of our business, we are routinely
a party or subject to other items of pending or threatened litigation. This
includes actions against borrowers to collect amounts on loans or to
repossess vehicles and litigation challenging the terms of loans we have
purchased. The ultimate outcome of these matters cannot be predicted and we
may not prevail in all of these lawsuits. Any order, judgment, settlement or
decree that was adverse to us could have a material adverse effect on us.

         THE FAILURE OF YEAR 2000 NON-COMPLIANT SYSTEMS, EITHER OUR OWN OR
THOSE OF OUR SIGNIFICANT THIRD PARTY PROVIDERS, MAY MAKE US UNABLE TO PERFORM
KEY OPERATING ACTIVITIES AND COULD ALSO SUBJECT US TO LITIGATION. We have
reviewed our automated information systems, including our loan accounting
system, business support systems and facility operating systems and have
initiated the replacement, modification or reprogramming of Year 2000
non-compliant hardware and software. In addition, we have developed and are
implementing a plan to contact parties which provide services critical to the
successful operation of our business to learn how they are addressing the
issue and to evaluate any likely impact on us. However, we have not yet
completed all necessary processes of our Year 2000 plan. Nor do we have
contingency plans in place in case we do not complete all phases of our Year
2000 program. If we do not complete our Year 2000 program successfully, we
may be unable to perform our key operating activities and could also be
subject to litigation regarding the results of systems failures, such as
improper application of repayments and resulting incorrect credit reporting
to credit bureaus.

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         OUR ABILITY TO COMPETE IN THE HIGHLY COMPETITIVE AUTOMOBILE
FINANCING MARKET MAY BE LIMITED BY OUR COMPETITORS' GREATER RESOURCES AND
BECAUSE WE DO NOT OFFER DEALERS ALL THE PROGRAMS THAT SOME COMPETITORS DO.
Many of our existing and potential competitors, which include well
established financial institutions, such as banks, other automobile finance
companies, small loan companies, thrifts and leasing companies and captive
finance companies owned by automobile manufacturers, such as General Motors
Acceptance Corporation, Chrysler Credit Corp. and Ford Motor Credit Company,
have greater financial, technical and marketing resources than we have. From
time to time these competitors offer special buyer incentives in the form of
below-market interest rates on certain classes of vehicles that we are unable
to match. Many of these competitors also have longstanding relationships with
automobile dealers, making it difficult for us to develop relationships with
those dealers. In addition, some of the major entities that compete with us
provide other forms of financing to automobile dealers, including dealer
floor plan financing and leasing, which we do not provide. All of this may
have the effect of making us less competitive.

         VIOLATIONS OF OR CHANGES IN THE LAWS AND REGULATIONS THAT GOVERN OUR
BUSINESS COULD HAVE A MATERIAL ADVERSE EFFECT ON US. Our business is subject
to numerous federal and state consumer protection laws and regulations. Among
other things, these laws and regulations:

         -        require us to obtain and maintain licenses and qualifications;

         -        limit interest rates, fees and other charges;

         -        limit or prescribe various other terms of our automobile loan
                  contracts;

         -        require specific disclosures; and

         -        define our rights to repossess and sell collateral vehicles.

If we were to violate these laws and regulations, even unintentionally, we
could be subject to government enforcement action or to consumer or
securityholder lawsuits seeking to recover for damages alleged to have
resulted from the violations. Changes in existing laws or regulations, or in
their interpretation, or the promulgation of additional laws or regulations
could, among other things, impose significant new restrictions on the way in
which we do business or result in significantly increased compliance costs.
If any of this happened, it could have a material adverse effect on us.

         OUR BOARD OF DIRECTORS HAS THE POWER TO CREATE AND ISSUE A NEW CLASS
OR SERIES OF STOCK THAT COULD ADVERSELY AFFECT THE VOTING POWER, DIVIDEND,
LIQUIDATION AND OTHER RIGHTS OF HOLDERS OF OUR COMMON STOCK. Our authorized
and unissued stock includes shares that are undesignated as to rights. Under
our articles of incorporation, our board of directors has the power to create
and issue new classes or series of stock using these undesignated shares. In
connection with this, our board of directors may give the new class or series
any rights, preferences and privileges that the

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<PAGE>

board of directors deems appropriate, including special dividend, liquidation
and voting rights. The creation and issuance of a new class or series of
stock could adversely affect the voting power, dividend, liquidation and
other rights of holders of our common stock and, possibly, any other class or
series of stock that is then in existence.

         OUR CHARTER DOCUMENTS AND SHAREHOLDER RIGHTS PLAN AND MINNESOTA LAW
MAY DISCOURAGE AN ACQUISITION OF OUR COMPANY. Provisions of our articles of
incorporation and bylaws, the existence of our shareholder rights plan and
the provisions of Minnesota law could make it more difficult for a third
party to acquire us, even if doing so would be beneficial to our shareholders.

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